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Oct 28, 2016

Hungary could scrap residency bond program

The scheme, which guarantees residency for at least five years to foreigners buying a bond for up to 300,000 euros, was no longer required because of an upturn in Hungary's financial outlook

Hungary has revealed it could scrap a euro-denominated residency bond program which attracts thousands of international investors.

János Lázár, the minister heading the Prime Minister’s office said the scheme, which guarantees residency for at least five years to foreigners buying a bond for up to 300,000 euros, was no longer required because of an upturn in Hungary's financial outlook.

Meanwhile, the Jobbik party recently warned it would not back the government's planned amendment to the constitution to ban the resettlement of migrants in Hungary unless the government abolished the residency bond scheme which was introduced three years ago.

With Jobbik's parliamentary support, the prime minister should be able to secure the two-thirds majority for passing the amendment, Reuters reports today.

Minister Lázár said that the decision to review the residency bond program had nothing to do with Jobbik's "blackmailing" and the review of the program had been under way for a while.

The review was needed, he said, because two credit rating upgrades enabled Hungary to return to traditional means of financing.

"I think we can return to traditional means of financing, with respect to the external debt of the state, so I am convinced that the residency bonds will not be needed in the upcoming period," Lazar said.

Almost 10,000 Chinese have taken advantage of the scheme to move to Hungary and the government had welcomed these and other affluent investors from Russia and the Middle East who bought residency bonds.

The government has not yet made a formal decision about the bonds. Lázár said Economy Minister Mihaly Varga was in the process of reviewing the program.